Jeremy Grantham Says 'Efficient Market Theory' Is Bunk & Cause Of Financial Crisis

Discussion in 'Economics' started by ByLoSellHi, Jun 6, 2009.

  1. Talking Business

    Poking Holes in a Theory on Markets

    Published: June 5, 2009

    For some months now, Jeremy Grantham, a respected market strategist with GMO, an institutional asset management company, has been railing about — of all things — the efficient market hypothesis.

    Jodi Hilton for The New York Times
    “Our default reflex is that the world knows what it is doing,” says Jeremy Grantham, a market strategist with GMO.

    You know what the efficient market hypothesis is, don’t you? It’s a theory that grew out of the University of Chicago’s finance department, and long held sway in academic circles, that the stock market can’t be beaten on any consistent basis because all available information is already built into stock prices. The stock market, in other words, is rational...